Younger borrowers are increasingly moving towards mortgage terms longer than 25 years, the Council of Mortgage Lenders (CML) says.
In the latest CML news & views the Council says borrowers are moving towards longer terms for a combination of reasons – including affordability pressures and longer working lives.
The proportion of borrowers taking out loans with repayment terms longer than 25 years has roughly doubled over the past five years, to 32 per cent in the third quarter of this year. Younger borrowers are disproportionately represented in this group.
In 2014, almost 60 per cent of mortgages with a loan term longer than 25 years have been taken out by borrowers aged 30 or under, while three-quarters of those taking out terms longer than 30 years were aged 30 or under.
Mortgage terms shorten as borrowers get older, the CML says. Among those aged 31-40, 79 per cent take out a mortgage with a term of up to 25 years, while 16 per cent have a loan lasting between 25 and 30 years, and 5 per cent have a term of between 30 and 35 years.
But among borrowers aged 41-50, 98 per cent have a term of up to 25 years, and 70 per cent have a term of less than 20 years.
The full edition of CML News & Views is available here.
